WDV vs. SLM Depreciation: Selecting the Optimal Method for Plant & Machinery

Choosing the Right Depreciation Strategy

Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life. The choice of depreciation method directly influences reported operating profits and enterprise valuation.

Straight Line Method (SLM)

SLM allocates an equal amount of depreciation expense across each year of the asset's useful life. It is ideal for assets that generate uniform utility over time, such as administrative buildings, long-term software licenses, and basic office fixtures.

Written Down Value (WDV) Method

WDV applies a constant percentage against the declining carrying amount of the asset, resulting in higher depreciation in early years and tapering off later. This matches the reality of industrial machinery, where maintenance costs escalate as the machine ages, creating a balanced total annual cost.

With Relaso Fixed Asset Management Software, finance teams can configure SLM or WDV at the individual asset category or asset component level effortlessly.